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Property & Wealth Creation SolutionsStructuring
for Asset Protection

Whether you are starting a new business or acquiring an existing one, it’s important to get the business structure right. Whilst structuring appropriately to save tax is important, the need to structure appropriately to protect your current and future assets is equally important.
Asset Protection Example

As an example, we show you below a real-life scenario which could have easily been avoided had the correct advice been sought.

Austin & Jane are a couple. They own their family home jointly and have a small debt to the bank. They decide they want to borrow some money and buy a café. Without advice, they simply buy the business in what we call a Mum and Dad partnership.  Cheap to establish and operate.

Five years or so goes by and trading is poor due to competition in the area. Debts are mounting with suppliers and the ATO but they persist and the problem gets larger. They are working long hours and decide it’s not worth it. They walk out of the business and leave a trail of other debts amounting to $ 100000 (to suppliers and the ATO). Austin and Jane are of the opinion that since the business has ceased, the $100,000 doesn’t need to be paid.

However that’s not the case. A simple partnership means that both of them are liable for the $100,000, and if they don’t pay it, someone may take action to recover it. Because Austin and Jane have good equity in their family home, a savvy supplier or the ATO will proceed to bankrupt the both of them and recover the money.

What should they have done?
  • Well firstly, consult with an accountant that understands asset protection. Then what they would have heard was:
  • Establish a company / trust to buy the business
  • Determine the correct director
  • Determine the correct shareholder
  • Transfer the home to the correct spouse.
Now, if they walked out, it’s more than likely that:
  • The company / trustee may be liquidated but it doesn’t own anything other than a failed business.
  • The director may be sued, but he doesn’t own anything. The house is not in the name of the director.
  • The shareholder has no exposure as a passive investor.

Whilst we don’t encourage our clients to deliberately go out there and not pay creditors, we do encourage them to set themselves up in such a manner that will preserve their assets in the event that the business fails for reasons beyond their control.

BOTTOM LINE:  Get advice at the very start regarding your structure. It can be too late to do anything later on.

With our extensive knowledge and expertise, we can help you with asset protection in Melbourne. Arrange your free no obligation meeting.

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Our clients have always trusted our expertise and advices. Here’s what they have to say about us.

The client service from everyone involved is exceptional and we could not be happier with how our business has been looked after over the years with the guidance from Nick and his team, especially in these ever changing times and competitive environments.

Rick Allen
Director of Nellakir (Aust) Pty Ltd

They have always been available to discuss my needs in simple English terms to understand, from extensive company and trust structures to when I first started out as a sole proprietor in the hospitality industry many years ago.

I look forward to the next 20 years with Vantage TBS. Thanks Guys.

Paul Stann
Director of Crème Café

I’ve been with Vantage Tax and Business Services (formerly Bonadio Partners) for 20 plus years and they have always been a great business partner throughout this time.

I would highly recommend Vantage.

Michael Chiodo
Director of Pasta Al Dente Pty Ltd

I’ve been a client of Vantage – Tax and Business Services for the last 5 years. In this time, the team have provided the utmost level of accounting advice, attention to detail and smooth transition of a number of my companies from our previous accounting relationship.

Anthony D’Alessandro
Director of Required Financial Services Pty Ltd

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Copyright by Vantage Tax & Business Services. All rights reserved.

Copyright by Vantage Tax & Business Services. All rights reserved.